How to Deduct TDS on a GST Bill?
- Calculate the Contract Value: Determine the total value of the supply under a single contract. Exclude the CGST, SGST, IGST, and any applicable cess from this calculation.
- Apply the TDS Rate: If the contract value exceeds ₹2.5 lakhs, apply the 2% TDS rate to the base taxable value.
- Deposit the TDS: The deducted TDS must be deposited with the government using the appropriate GST forms and challans.
- Issue TDS Certificate: A TDS certificate (Form GSTR-7A) must be furnished to the supplier within 5 days of depositing the TDS.
Note: TDS provisions under GST are subject to updates and changes. Consult the latest guidelines on the official GST website for accurate information.
How to Deduct TDS on GST Bill? (with example)
TDS, or Tax Deducted at Source, is a mechanism in the Indian tax system designed to collect taxes at the time of payment. Under the GST regime, certain entities must deduct TDS when making payments for specific goods or services. In this article, we’ll explain how to deduct TDS on a GST bill and provide a clear, illustrative example.